Silver nanoparticles synthesized in a synthetic sapphire matrix were fabricated by ion implantation using the metal vapor vacuum arc ion source. The optical absorption spectrum of the Ag: Al2O3 composite material has been measured. The analysis of the supercontinuum spectrum displayed the nonlinear refractive property of this kind of sample. Nonlinear optical refraction index was identified at 800 nm excitation using the Kerr-lens autocorrelation (KLAC) technique. The spectrum showed that the material possessed self-defocusing property (n2 = −1.1 × 10−15 cm2/W). The mechanism of nonlinear refraction has been discussed.